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Vernon pays $500,000 to ex-official who pleaded guilty to corruption

August 3, 2011 | 10:56
am

The city of Vernon this week paid $500,000 to a former city administrator who last month pleaded guilty to felony corruption charges involving questionable business deals between the city and his wife.

The payment was made to close out the remaining time on the contract of Donal O'Callaghan, who was placed on leave last year after The Times revealed that he had overseen his wife’s hiring as a city contractor. L.A. prosecutors later charged him with conflict of interest and misappropriation of public funds.

O'Callaghan had demanded $1.2 million from the city, and the $500,000 settlement prevented a potentially messy courtroom fight occurring as state lawmakers are considering whether to disband the embattled city.

“The city approached this situation in an entirely rational fashion,” said David Schindler, the outside attorney representing Vernon. “It made an intelligent business decision that was in the best interest of the city.”

O'Callaghan's contract, which was obtained by The Times through a Public Records Act Request, included a special provision preventing Vernon from terminating him with cause unless he was convicted of a “felony involving moral turpitude.”

But Schindler said he wasn’t certain the city could successfully litigate the case had O'Callaghan sued, saying it was far from clear that a violation of state conflict-of-interest codes amounted to "moral turpitude."

Mark Werksman, O’Callaghan’s attorney, said the settlement was “totally lawful and appropriate.”

“The guy had a contract, it was valid and he was entitled to a lot more,” Werksman said. “He wanted to resolve this and move on.”

O’Callaghan was one of the highest paid public employees in the state over the last five years, making as much as $785,000 in 2009. During his five-year tenure he served as the director of Vernon’s power utility and its top administrator.

After his plea last month to conflict-of-interest charges, O’Callaghan was sentenced to one year summary probation and 200 hours community service.

He is the third top Vernon officials to be convicted of public corruption charges in the last five years. One of his predecessors as city administrator, Bruce Malkenhorst, pleaded guilty to corruption charges earlier this year.

Despite the charge, Malkenhorst still receives the highest pension in the California Public Employees Retirement system: $509,664 a year.